Although Amazon has not set a specific date, sources close to the company believe the online store is set to introduce its digital music download service on September 17. Amazon revised a launch date several times, however, but September seems to be the month nonetheless.

At launch, it is thought Amazon will have around 1 million songs available to download in MP3 format, compared to market leader iTunes, which offers around 5 million songs. Amazon also does not have all music companies on board and will only be offering tracks from Universal Music, EMI, and independent labels. The two major omissions are Sony BMG and Warner Music Group, because Amazon is not using DRM, and these two labels still insist on it.

Amazon is still in negotiations over pricing for individual tracks, but it is thought the company wants to offer brand new songs for US$0.99 and older songs for 89 cents, therefore undercutting iTunes. Albums are also thought to be between $7.99 and $9.99.

When iTunes is your main competitor, there is no good time to launch, but Amazon is doing it right after a big Apple event on September 5 where we expect to hear about new iPods. Launching a new music store after an announcement like that is likely to be lost in the rush to dissect the latest Apple gadget.

Keeping the price below iTunes and not using DRM mean Amazon should hit the ground running. The lack of songs is a worry, but its catalog will grow over time. Amazon is also big enough to deal with the costs involved in advertising the music service properly and has the advantage of already having a user base and website people visit regularly.

Amazon is one of the big remaining companies that has the clout and brand to take on Apple in the digital music arena. Whether it can take a big chunk out of iTunes market will be based on how the music service is presented, whether the company can keep the prices low and how much music it can offer.